U.S. 30-year Mortgage Rate Rises to a 9-Month High

According to a Reuters report on May 27, data from the Mortgage Bankers Association showed that as of the week ended May 22, the average rate for 30-year fixed-rate mortgages rose by 9 basis points to 6.655%, hitting a nine-month high. The last time rates were above this level was in August 2025, before the Federal Reserve initiated a rate-cutting cycle.

The core driver for this round of rising interest rates comes from the reaccumulation of inflationary pressures. The ongoing war in Iran continues to push up oil prices, leading to an annual increase in CPI to 3.8% in April, far higher than the 2.9% in August last year. More and more Federal Reserve officials are beginning to discuss the need to restart interest rate hikes, and financial markets have factored the likelihood of rate hikes within the year into pricing.

The rise in interest rates directly suppresses demand for buying homes. MBA data shows that last week's mortgage application volume fell by 8.5% month-on-month, with the main drag coming from the contraction of refinancing business.

At the same time, a power transition is taking place within the Federal Reserve. Kevin Warsh has replaced Jerome Powell as chairman, and Trump publicly stated that rates would decrease within hours after Warsh's swearing-in. However, market trends have contradicted this, indicating a clear divergence in the market's judgment on inflation prospects compared to the White House.

Mortgage interest rates have limited correlation with the Federal Reserve's short-term policy rates and are more anchored to the yield of 10-year U.S. Treasury bonds. This week, the market is anticipating the reopening of the Strait of Hormuz, with U.S. Treasury yields retreating somewhat, and subsequent negotiations will be a key variable to observe the direction of mortgage rates.